[Federal Register Volume 86, Number 91 (Thursday, May 13, 2021)]
[Notices]
[Pages 26242-26245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-10056]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91790; File Nos. SR-NYSE-2021-15, SR-NYSEAMER-2021-13, 
SR-NYSEArca-2021-15, SR-NYSECHX-2021-04, SR-NYSENAT-2021-05]


Self-Regulatory Organizations; New York Stock Exchange LLC, NYSE 
American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE National, 
Inc.; Suspension of and Order Instituting Proceedings To Determine 
Whether To Approve or Disapprove Proposed Rule Changes To Amend the Fee 
Schedules Related to Co-Location

May 7, 2021.

I. Introduction

    On March 10, 2021, New York Stock Exchange LLC (``NYSE''), NYSE 
American LLC (``NYSE American''), NYSE Arca, Inc. (``NYSE Arca''), NYSE 
Chicago, Inc. (``NYSE Chicago''), and NYSE National, Inc. (``NYSE 
National'') (collectively, the ``Exchanges'') each filed with the 
Securities and Exchange Commission (the ``Commission''), pursuant to 
Section 19(b)(1) of the

[[Page 26243]]

Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to provide Users with access to 
the systems and connectivity to the data feeds of several third parties 
and establish associated fees.\3\ Each proposed rule change was 
immediately effective upon filing with the Commission pursuant to 
Section 19(b)(3)(A) of the Act.\4\ The proposed rule changes were 
published for comment in the Federal Register on March 29, 2021.\5\ The 
Commission received no comment letters on the proposals. Pursuant to 
Section 19(b)(3)(C) of the Act,\6\ the Commission is hereby: (1) 
Temporarily suspending File Nos. SR-NYSE-2021-15, SR-NYSEAMER-2021-13, 
SR-NYSEArca-2021-15, SR-NYSECHX-2021-04, and SR-NYSENAT-2021-05; and 
(2) instituting proceedings to determine whether to approve or 
disapprove File Nos. SR-NYSE-2021-15, SR-NYSEAMER-2021-13, SR-NYSEArca-
2021-15, SR-NYSECHX-2021-04, and SR-NYSENAT-2021-05.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See also infra note 11.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ See Securities Exchange Act Release Nos. 91386 (March 23, 
2021), 86 FR 16410 (March 29, 2021) (SR-NYSE-2021-15); 91387 (March 
23, 2021), 86 FR 16417 (March 29, 2021) (SR-NYSEAMER-2021-13); 91388 
(March 23, 2021), 86 FR 16433 (March 29, 2021) (SR-NYSEArca-2021-
15); 91390 (March 23, 2021), 86 FR 16424 (March 29, 2021) (SR-
NYSECHX-2021-04) (each, a ``Notice). For ease of reference, page 
citations are to the Notice for NYSE-2021-15.
    \6\ 15 U.S.C. 78s(b)(3)(C).
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II. Description of the Proposed Rule Change

    The Exchanges, as part of their co-location services, offer Users 
connectivity to the execution systems of third party markets and other 
content service providers (``Third Party Systems''), and data feeds 
from third party markets and other content service providers (``Third 
Party Data Feeds'').\7\ The Exchanges charge fees for connectivity to 
Third Party Systems and Third Party Data Feeds. The list of Third Party 
Systems and Third Party Data Feeds and associated fees for connectivity 
thereto are set forth in the Exchanges' fee schedules.
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    \7\ See Notice, supra note 5, at 16410. For purposes of the 
Exchanges' co-location services, a ``User'' means any market 
participant that requests to receive co-location services directly 
from one or more of the Exchanges, and a User that incurs colocation 
fees for a particular co-location service charged by one Exchange 
would not be subject to co-location fees for the same co-location 
service charged by the Exchange's affiliates. See id. at 16410 n.5.
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    In the instant filings, the Exchanges propose to offer and charge 
fees for connectivity to several additional Third Party Systems and 
Third Party Data Feeds. Specifically, the Exchanges propose to expand 
their offerings to include connectivity to the systems of Long Term 
Stock Exchange, Members Exchange (``MEMX''), MIAX Emerald, MIAX PEARL 
Equities, Morgan Stanley, and TD Ameritrade, and (``Proposed Third 
Party Systems'').\8\ The fees associated with these connections would 
be determined by the bandwidth a User chooses.\9\ The Exchanges also 
propose to expand their offerings to include connectivity to the data 
feeds of MEMX, MIAX Emerald, MIAX PEARL Equities, and ICE Data 
Services--ICE TMC (``Proposed Third Party Data Feeds).'' \10\ The 
Exchanges propose to charge the following monthly connectivity fees for 
each of the Proposed Third Party Data Feeds: $3,000 for Members 
Exchange, $3,500 for MIAX Emerald, and $2,500 for MIAX PEARL Equities, 
and $200 for ICE Data Services--ICE TMC.\11\
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    \8\ See Notice, supra note 5, at 16410-11.
    \9\ The Exchanges' fee schedules set forth the current monthly 
recurring fees per connection to Third Party Systems based on the 
bandwidth of the connection: $200 for 1 Mb, $400 for 3 Mb, $500 for 
5 Mb, $800 for 10 Mb, $1,200 for 25 Mb, $1,800 for 50 Mb, $2,500 for 
100 Mb, $3,000 for 200 Mb, $3,500 for 1 Gb.
    \10\ Notice, supra note 5, at 16411. The Exchange represents 
that the Proposed ICE TMC Third Party Data Feed is generated by ICE 
Bonds, an indirect subsidiary of ICE, and includes market data for 
the ICE TMC alternative trading system and that it does not include 
market data of the Exchange or Affiliate SROs. Id. at 16411 n.7.
    \11\ Id. at 16411. The Exchanges also propose to amend the fee 
schedules to change the name of the ``Miami International Securities 
Exchange'' Third Party System to ``MIAX Options,'' to change the 
name of the ``MIAX PEARL'' Third Party System to ``MIAX PEARL 
Options,'' and to combine MIAX Options, MIAX PEARL Options, MIAX 
PEARL Equities, and MIAX Emerald as a single Third Party System on 
the fee schedules. The Exchanges further propose to remove obsolete 
rule text from their co-location fee schedules: (i) The reference to 
the ICE Data Global Index from the list of Third Party Data Feeds 
available for connectivity in the fee schedules and to remove the 
text noting that the Exchanges would inform customers that it would 
cease offering connectivity to the ICE Data Global Index once it was 
unavailable; and (ii) the reference in fee schedule indicating 
waiver of the Hot Hands fees from the date of the closing of the 
data center in Mahwah, New Jersey, through the date of the reopening 
of the data center (which occurred on October 1, 2020). See Notice, 
supra note 5, at 16411-16413.
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III. Suspension of the Proposed Rule Change

    Pursuant to Section 19(b)(3)(C) of the Act,\12\ at any time within 
60 days of the date of filing of an immediately effective proposed rule 
change pursuant to Section 19(b)(1) of the Act,\13\ the Commission 
summarily may temporarily suspend the change in the rules of a self-
regulatory organization (``SRO'') if it appears to the Commission that 
such action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act. As discussed below, the Commission believes a temporary 
suspension of the proposed rule changes is necessary and appropriate to 
allow for additional analysis of the proposed rule changes' consistency 
with the Act and the rules thereunder.
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    \12\ 15 U.S.C. 78s(b)(3)(C).
    \13\ 15 U.S.C. 78s(b)(1).
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    The Exchanges provide various arguments in support of the proposed 
fees for connections to the Proposed Third Party Data Systems and 
Proposed Third Party Data Feeds. With respect to whether the proposed 
fees are reasonable, the Exchanges argue that the market for access to 
Third Party Data Systems and Third Party Data Feeds is competitive, and 
that the availability of substitutes is a check on their ability to 
charge unreasonable fees for these services.\14\ The Exchanges also 
maintain that fees charged for co-location are constrained by active 
competition for order flow of, and other business from, such market 
participants.\15\ The Exchanges state that they compete with other 
providers, including other colocation providers and market data 
vendors, which may include Hosting Users.\16\ They state that they 
understand that at least one other vendor currently offers the Proposed 
MIAX Third Party Data Feeds, and that they are aware of no impediment 
to third parties offering substitute services.\17\ The Exchanges also 
state that if one or more third parties presently offer, or in the 
future opt to offer, access and connectivity to Third Party Systems and 
Third Party Data Feeds to Users, a User may utilize the IDS network, a 
third party telecommunication network, a cross connect, or a 
combination thereof to access such services and products through a 
connection to an access center outside the data center (which could be 
an IDS access center, a third-party access center, or both), another 
User, or a third party vendor.\18\ The Exchanges also state that the 
fees are reasonable because they allow the Exchanges to defray or cover 
the costs of the data center facility hardware and technology 
infrastructure necessary to provide connectivity to Users.\19\ 
Regarding differences in fees for the Proposed

[[Page 26244]]

Third Party Data Feeds, the Exchanges state that they can charge the 
ICE TMC Third Party Data Feed a lower price because they can offer the 
feed over their established connection with less effort, since they 
already offer several Third Party Data Feeds supplied by ICE Data 
Service.\20\ They state that they must establish and maintain 
connections to the exchanges for the other proposed Third Party Data 
Feeds,\21\ and that MIAX charges separate fees to the Exchange to 
become a distributor of each of its data feed products, and that the 
distribution fees that the Exchange must pay to MIAX are higher for the 
proposed MIAX Emerald Third Party Data Feed than for the proposed MIAX 
PEARL Equities Third Party Data Feed.\22\
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    \14\ See Notice, supra note 5, at 16414.
    \15\ See id. at 16414 and 16416.
    \16\ See id.
    \17\ See id. at 16414.
    \18\ See id. at 16415.
    \19\ See id. at 16414.
    \20\ See id.
    \21\ See id.
    \22\ See id.
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    In addition, the Exchanges state that the proposed fees are 
equitably allocated and not unfairly discriminatory because they would 
apply to all Users equally, the proposed services are voluntary, and 
Users would only be charged if they opted to use them.\23\ Further, the 
Exchanges state that the proposals do not impose a burden on 
competition that is not necessary or appropriate because they offer 
choice and reflects the competitive environment.\24\
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    \23\ See id. at 16415.
    \24\ See id. at 16416.
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    When exchanges file their proposed rule changes with the 
Commission, including fee filings, they are required to provide a 
statement supporting the proposal's basis under the Act and the rules 
and regulations thereunder applicable to the exchange.\25\ The 
instructions to Form 19b-4, on which exchanges file their proposed rule 
changes, specify that such statement ``should be sufficiently detailed 
and specific to support a finding that the proposed rule change is 
consistent with [those] requirements'' \26\
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    \25\ See 17 CFR 240.19b-4 (Item 3 entitled ``Self-Regulatory 
Organization's Statement of the Purpose of, and Statutory Basis for, 
the Proposed Rule Change'').
    \26\ See id.
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    Section 6 of the Act, including Sections 6(b)(4), (5), and (8), 
require the rules of an exchange to: (1) Provide for the equitable 
allocation of reasonable fees among members, issuers, and other persons 
using the exchange's facilities; \27\ (2) perfect the mechanism of a 
free and open market and a national market system, protect investors 
and the public interest, and not be designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers; \28\ 
and (3) not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.\29\
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    \27\ 15 U.S.C. 78f(b)(4).
    \28\ 15 U.S.C. 78f(b)(5).
    \29\ 15 U.S.C. 78f(b)(8).
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    In temporarily suspending the Exchanges' proposed rule changes, the 
Commission intends to further consider whether the proposed fees for 
connections to the Proposed Third Party Data Systems and the Proposed 
Third Party Data Feeds are consistent with the statutory requirements 
applicable to a national securities exchange under the Act. In 
particular, the Commission will consider whether the proposed rule 
changes satisfy the standards under the Act and the rules thereunder 
requiring, among other things, that an exchange's rules provide for the 
equitable allocation of reasonable fees among members, issuers, and 
other persons using its facilities; are designed to perfect the 
operation of a free and open market and a national market system, and 
to protect investors and the public interest; are not designed to 
permit unfair discrimination between customers, issuers, brokers or 
dealers; and do not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.\30\
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    \30\ See 15 U.S.C. 78f(b)(4), (5), and (8), respectively.
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    Therefore, the Commission finds that it is appropriate in the 
public interest, for the protection of investors, and otherwise in 
furtherance of the purposes of the Act, to temporarily suspend the 
proposed rule changes.\31\
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    \31\ For purposes of temporarily suspending the proposed rule 
change, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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IV. Proceedings To Determine Whether To Approve or Disapprove the 
Proposed Rule Changes

    In addition to temporarily suspending the proposals, the Commission 
also hereby institutes proceedings pursuant to Sections 19(b)(3)(C) 
\32\ and 19(b)(2)(B) of the Act \33\ to determine whether the Exchanges 
proposed rule changes should be approved or disapproved. Institution of 
proceedings does not indicate that the Commission has reached any 
conclusions with respect to any of the issues involved. Rather, the 
Commission seeks and encourages interested persons to provide 
additional comment on the proposed rule changes to inform the 
Commission's analysis of whether to approve or disapprove the proposed 
rule changes.
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    \32\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily 
suspends a proposed rule change, Section 19(b)(3)(C) of the Act 
requires that the Commission institute proceedings under Section 
19(b)(2)(B) to determine whether a proposed rule change should be 
approved or disapproved.
    \33\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\34\ the Commission is 
providing notice of the grounds for possible disapproval under 
consideration:
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    \34\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also 
provides that proceedings to determine whether to disapprove a 
proposed rule change must be concluded within 180 days of the date 
of publication of notice of the filing of the proposed rule change. 
See id. The time for conclusion of the proceedings may be extended 
for up to 60 days if the Commission finds good cause for such 
extension and publishes its reasons for so finding, or if the 
exchange consents to the longer period. See id.
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     Whether the Exchanges have demonstrated how the proposed 
fees are consistent with Section 6(b)(4) of the Act, which requires 
that the rules of a national securities exchange ``provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and issuers and other persons using its facilities''; \35\
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    \35\ 15 U.S.C. 78f(b)(4).
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     Whether the Exchanges have demonstrated how the proposed 
fees are consistent with Section 6(b)(5) of the Act, which requires, 
among other things, that the rules of a national securities exchange 
not be ``designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers''; \36\ and
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    \36\ 15 U.S.C. 78f(b)(5).
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     Whether the Exchanges have demonstrated how the proposed 
fees are consistent with Section 6(b)(8) of the Act, which requires 
that the rules of a national securities exchange ``not impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of [the Act].'' \37\
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    \37\ 15 U.S.C. 78f(b)(8).
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    As discussed in Section III above, the Exchanges argue that the 
fees proposed for connectivity to the Proposed Third Party Data Systems 
and Proposed Third Party Data Feeds are constrained by competition, and 
allow the Exchanges to defray or cover the costs of offering the 
services. The Commission believes that there are questions as to 
whether the Exchanges have provided sufficient information to 
demonstrate that the proposals, including in particular the fees for 
connectivity to the Proposed Third Party Systems and Proposed Third 
Party Data Feeds, are consistent with the Act.
    Under the Commission's Rules of Practice, the ``burden to 
demonstrate that a proposed rule change is consistent with the [Act] 
and the rules

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and regulations issued thereunder . . . is on the [SRO] that proposed 
the rule change.'' \38\ The description of a proposed rule change, its 
purpose and operation, its effect, and a legal analysis of its 
consistency with applicable requirements must all be sufficiently 
detailed and specific to support an affirmative Commission finding,\39\ 
and any failure of an SRO to provide this information may result in the 
Commission not having a sufficient basis to make an affirmative finding 
that a proposed rule change is consistent with the Act and the 
applicable rules and regulations.\40\
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    \38\ 17 CFR 201.700(b)(3).
    \39\ See id.
    \40\ See id.
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    The Commission is instituting proceedings to allow for additional 
consideration and comment on the issues raised herein, including as to 
whether the proposed fees are consistent with the Act, and 
specifically, with its requirements that the rules of a national 
securities exchange provide for the equitable allocation of reasonable 
dues, fees, and other charges among its members, issuers, and other 
persons using its facilities; are designed to perfect the operation of 
a free and open market and a national market system, and to protect 
investors and the public interest; are not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers; and do 
not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act; as well as any 
other provision of the Act, or the rules and regulations thereunder.

V. Commission's Solicitation of Comments

    The Commission requests written views, data, and arguments with 
respect to the concerns identified above as well as any other relevant 
concerns. Such comments should be submitted by June 3, 2021. Rebuttal 
comments should be submitted by June 17, 2021. Although there do not 
appear to be any issues relevant to approval or disapproval which would 
be facilitated by an oral presentation of views, data, and arguments, 
the Commission will consider, pursuant to Rule 19b-4, any request for 
an opportunity to make an oral presentation.\41\
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    \41\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by an SRO. See Securities 
Acts Amendments of 1975, Report of the Senate Committee on Banking, 
Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th 
Cong., 1st Sess. 30 (1975).
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    The Commission asks that commenters address the sufficiency and 
merit of the Exchange's statements in support of the proposals, in 
addition to any other comments they may wish to submit about the 
proposed rule changes.
    Interested persons are invited to submit written data, views, and 
arguments concerning the proposed rule changes, including whether the 
proposed rule change is consistent with the Act. Comments may be 
submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Nos. SR-NYSE-2021-15, SR-NYSEAMER-2021-13, SR-NYSEArca-2021-15, 
SR-NYSECHX-2021-04, and SR-NYSENAT-2021-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Nos. SR-NYSE-2021-15, SR-NYSEAMER-
2021-13, SR-NYSEArca-2021-15, SR-NYSECHX-2021-04, and SR-NYSENAT-2021-
05. The file number should be included on the subject line if email is 
used. To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for website 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street NE, Washington, DC 20549, on official business days between the 
hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make publicly available. All 
submissions should refer to File Nos. SR-NYSE-2021-15, SR-NYSEAMER-
2021-13, SR-NYSEArca-2021-15, SR-NYSECHX-2021-04, and SR-NYSENAT-2021-
05 and should be submitted on or before June 3, 2021. Rebuttal comments 
should be submitted by June 17, 2021.

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(3)(C) of the 
Act,\42\ that File Nos. SR-NYSE-2021-15, SR-NYSEAMER-2021-13, SR-
NYSEArca-2021-15, SR-NYSECHX-2021-04, and SR-NYSENAT-2021-05, be and 
hereby are, temporarily suspended. In addition, the Commission is 
instituting proceedings to determine whether the proposed rule changes 
should be approved or disapproved.
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    \42\ 15 U.S.C. 78s(b)(3)(C).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\43\
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    \43\ 17 CFR 200.30-3(a)(57) and (58).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021-10056 Filed 5-12-21; 8:45 am]
BILLING CODE 8011-01-P